China's Cobalt Products Prices Fall Further on Stock Build-up

SHANGHAI, Sept. 9 -- Cobalt product prices in China have fallen again in the last week on high inventory and lack of interest from downstream buyers.

    Cobalt chloride is mostly changing hands between RMB 68,000-70,000/mt (USD 9,959-10,252/mt) in the past week, down from RMB 72,000-73,000/mt previously.

    "Inventories are very high. Cobalt inventory in all cobalt products in China could amount to more than 10,000 mt of metal now, enough for one year of consumption," said an official from a significant cobalt products producer.

    An official from Jinchuan Group said last week that there could be at least 4,000 mt of cobalt inventory in China, equivalent to three months' of consumption.

    "I don't expect this inventory pressure will go away any time soon. China's cobalt concentrate imports will remain high for a few more months after July's record level," said a trader in Beijing.

    Meanwhile, although lower cobalt salts prices have encouraged more interest in recent days, some sources suggested most buyers have yet to return to the market.

    "The mid-stream buyers are expecting lower prices, although it seems that they will have to go back to the market for restocking after mid-September," said a trader in Shanghai.

    Lithium cobalt oxide is selling at RMB 240,000/mt, down from RMB 245,000/mt previously, while the raw material cobalt oxide (II,III) has declined from RMB 240,000/mt to around RMB 235,000/mt.

    "Lithium cobalt oxide is almost at the same level as the raw material. How can they make any money?" a Beijing-based analyst said.

    "Most of the downstream battery industry isn't faring well in China as a lot of orders have moved away from the country. Cobalt prices in China have been higher than international prices for a long time, so Chinese battery manufacturers have lost some of their cost advantage and some orders," he added.

    The analyst said the average utilization rate is only 60-70% now in the battery industry, lower than 90% previously.

    But compared with decline in the cobalt salts price, cobalt metal's price appears comparatively flat and business remains very quiet.

    "Cobalt metal is mostly controlled by traders, and they will not sell much at low prices. They are hoping to see a price rebound in October, so they refuse to lower their offers by much," said a second Shanghai-based trader.

    (Source: Metal Bulletin)